by Philip Hackney for The Conversation
NEW YORK — The Donald J. Trump Foundation is now defunct, and the state of New York has ordered the president to give US$2 million to a group of nonprofits out of his own pocket as restitution for breaking the law by misusing charitable funds.
I’m an expert on charitable tax law who used to work at the Internal Revenue Service. I find Trump’s admissions of impropriety in the settlement to a lawsuit New York authorities filed against him startling. But although this saga may appear to have concluded, I don’t believe that the full repercussions of his legal woes have become clear.
New York Supreme Court Judge Saliann Scarpulla found that four members of the Trump family and their fellow officers and directors violated their fiduciary duties to avoid the illegal practice of “self-dealing” – when the people who run a charity benefit from it – and broke other rules and regulations.
Trump served as the foundation’s president for three decades after its 1987 founding. He abdicated that role three days after his inauguration.
Ivanka Trump, Eric Trump and Donald Trump Jr. all served on the Trump Foundation board, which never met between 1999 and 2018, although Ivanka stepped down during when she joined the Trump administration. According to the settlement made public on Nov. 7, the directors also failed to “provide oversight, set policy or approve the direction, operations or acts of the foundation.”
The Trump Foundation, among other misdeeds, improperly spent $250,000 to settle the legal disputes incurred by the Trump family’s business dealings.
Trump also used $25,000 in charitable money to make a donation to support the reelection campaign of then-Florida Attorney General Pam Bondi, a Republican who is reportedly going to join his administration soon and at the time was considering whether to launch an investigation of Trump University – which, like the foundation, has been dismantled.
Federal law prohibits the use of charitable money to make political donations.
Trump occasionally used the foundation’s money to purchase things he simply wanted to own, including football player Tim Tebow’s autographed helmet and two paintings of himself.
Although the Trumps had already agreed in December 2018 to dissolve the foundation, and they had previously admitted to committing legal violations, the specifics of the settlement did not get sorted out for nearly another year.
If Trump ever launches a new charity chartered in New York or even sits on a charitable board, he’ll have to submit to an unusual degree of monitoring. A majority of board seats on any new Trump charity would have to be occupied by people who aren’t in his family. The charity would have to employ a qualified lawyer. It would have to be audited regularly to ensure that it doesn’t pay Trump or his company for any services.
Eight nonprofits will share Trump’s $2 million in restitution and the $1.78 million remaining in the Trump Foundation’s coffers. They are Army Emergency Relief, the Children’s Aid Society, Citymeals on Wheels, Give an Hour, Martha’s Table, the United Negro College Fund, United Way of the National Capital Area and the U.S. Holocaust Memorial Museum.
Interestingly, the settlement mentions that Trump and his businesses had already paid a total of about $340,000 back to the Trump Foundation between 2016 and 2019 to cover the amount of money disbursed for his self-dealing transactions.
And it’s worth noting that the Trumps can’t take a charitable deduction on any of these payments to charity when they file their taxes.
Trump’s own take
Despite having reached a settlement requiring his admission of wrongdoing, the president seemed to informally assert he did nothing wrong.
Trump tweeted a statement accusing Letitia James, New York’s attorney general, of “deliberately mischaracterizing” the settlement.
“All they found was incredibly effective philanthropy and some small technical violations, such as not keeping board minutes,” he said through the social media platform. The statement also referred to Trump’s decision to officially move his official residence from New York City to Palm Beach, Florida.
The Trump Foundation had disbursed about $19 million over the past decade, including $8.25 million of the president’s own money, to hundreds of charitable organizations, according to its lawyer, Alan Futerfas.
It’s unprecedented that a sitting president of the United States officially admits to this kind of wrongdoing and agrees to formal supervision if he should ever venture back into the charitable world. And while it’s not unheard of, it’s uncommon for legal authorities to order anyone to spend millions of dollars to compensate the public for misusing charitable funds under their control.
One reason is that it’s pretty hard to get caught. For the most part, charity laws and regulations are not subject to across-the-board enforcement at the state level or by the IRS.
The closest precedent involving the White House and charitable transgressions that comes to mind occurred half a century ago.
President Richard Nixon’s attorneys falsified documents from him to take a tax deduction on the value of his pre-presidential papers he said he’d donated to the National Archives prior to July 25, 1969.
After an IRS employee leaked information about Nixon’s tax return, he agreed to allow the Joint Committee on Internal Revenue Taxation to examine the propriety of his returns from that time. It found other failures to boot. Nixon had to pay more than $450,000 in back taxes and interest.
Nixon also allegedly exchanged $2 million in dairy industry campaign contributions for increasing milk subsidies. Those revelations came out in the middle of the Watergate inquiry that led to his exit from office.
A more recent parallel involved Paul C. Cabot Jr., who pilfered millions of dollars from the Paul & Virginia Cabot Charitable Trust to finance his own lavish lifestyle. In 2004, the Massachusetts attorney general ordered Cabot Jr., the heir to a mutual fund pioneer, to pay $4 million in restitution.
Cabot Jr. was completely barred from serving as a board member in any Massachusetts charity for life.
While Trump has resolved his civil liability with the state of New York associated with his shuttered foundation, this settlement may mean that Trump will owe the IRS money.
That’s because he has admitted that his campaign took advantage of the foundation’s expenditures to boost his 2016 presidential bid. In particular, the political campaign took control over the disbursement of $2.8 million to veterans’ causes at a televised fundraiser that doubled as a campaign event.
Because tax law clearly bars charities like the Trump Foundation from attempting to “influence the outcome of any specific public election,” I believe that the foundation could owe a 10% excise tax of the amount involved – $282,300.
The precedent for this would be the $2,500 Trump paid to the IRS in 2016 after reimbursing the Foundation for the $25,000 Bondi campaign contribution.
Philip Hackney is an Associate Professor of Law at the University of Pittsburgh.
The Conversation publishes knowledge-based journalism that is responsible, ethical and supported by evidence from academics and researchers in order to inform public debate with facts, clarity and insight into society’s biggest problems.
Bev Hills Police Chief to Retire Amid Discrimination Lawsuits
BEVERLY HILLS — Beverly Hills City Manager George Chavez announced that Police Chief Sandra Spagnoli will retire from the department, effective May 15, 2020.
NBC LA cites “several law enforcement and other sources” as saying that Spagnoli was notified “she had until Friday, April 24, to resign or face possible termination.”
Spagnoli joined BHPD in February of 2016 from the City of San Leandro in Northern California where she served as Chief since 2011. She has been accused in multiple lawsuits of using slurs and making remarks about Jews, employees who were LGBTQ and people of color. NBCLA reports on allegations of promoting mostly white men and having sexual contact with employees.
“During the Chief’s tenure, crime was reduced while the department increased diversity, public outreach, best practices and advancements in technology,” said Chavez. “We thank Chief Spagnoli for her service to our community and her three decades of public service in law enforcement.”
“I am grateful to have served Beverly Hills and proud of the accomplishments over the past 4 years to keep this world-class community one of the safest in the nation,” said Chief Spagnoli.
Chavez is expected to name an Interim Police Chief in the coming weeks.
Target Sued, Man Claims Hand Sanitizer Won’t Kill Coronavirus
LOS ANGELES (TMZ) — Target has a target on its back, legally speaking … the retail giant is being sued over the effectiveness — or lack thereof — of its store-brand hand sanitizer to combat coronavirus.
A man named Mardig Taslakian from Los Angeles filed a class-action lawsuit against Target and its super popular store brand, Up&Up, claiming the company deceptively markets its hand sanitizer “to eliminate 99.99% of germs” when there’s no proof to back that claim.
According to new legal docs, obtained by TMZ, Taslakian has beef with Target marketing its Up&Up-brand hand sanitizer as comparable to Purell … which is dealing with its own lawsuit over allegedly misleading claims.
Taslakian claims the same January 17, 2020 warning letter the FDA sent to Purell — that there’s no scientific data to support its germ-killing effectiveness — should also apply to Target.
According to docs, Taslakian says that “by comparing its less expensive in-house private label product” to Purell’s more expensive hand sanitizer … Target misleads customers into thinking its hand sanitizer is as effective as Purell’s “and can therefore prevent disease or infection from, for example, Coronavirus and flu, along with other claims that go beyond the general intended use of a topical alcohol-based hand sanitizer.”
Although, Taslakian is accusing Target of insinuating its sanitizer combats coronavirus … the product never makes such a claim.
Taslakian want damages, including punitives, and an order stopping Target from making the claims on the bottles. We’ve reached out to Target, so far no word back.
Starbucks Sued for Refusing to Redeem Gift Card for Cash in WeHo
WEST HOLLYWOOD (Patch.com) — The Starbucks Corp. is being sued by a customer who alleges the coffee shop chain in 2019 wrongfully denied him a $1.70 cash redemption for the balance on his gift card at one of its West Hollywood stores, maintaining the company was obligated to do so by law.
Robert Paskey’s Los Angeles Superior Court lawsuit seeks compensatory and punitive damages as well as a court order that Starbucks provide cash redemptions for gift cards having a balance of less than $10.
A Starbucks representative did not immediately reply to a request for comment on the suit filed Thursday.
Paskey went to the location in the 8900 block of Santa Monica Boulevard on Dec. 26 and a clerk there denied him his request for the $1.70 cash redemption on his gift card, telling […]
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This Just In…
- County Hospitals Receive 300 iPads for Patients to See Family
- Processions to Cedars Will Salute Healthcare Workers on National Nurses Day
- WeHo Webinar: Loneliness, Isolation, Depression, and Anxiety During Pandemic
- Texas & California Wet Markets Show Full Extent of Vile Conditions
- White House Gift Shop Selling Coronavirus Commemorative Coins
- Joe Exotic Prison Has 2nd Highest ‘Rona Rate
- Beverly Hills Votes To Resume Plastic Surgery Despite Coronavirus Pandemic